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In his State of the City Address, New York mayor Bill de Blasio laid out his governing philosophy succinctly:

Here’s the truth, brothers and sisters, there’s plenty of money in the world. Plenty of money in this city. It’s just in the wrong hands!

The money, of course, is in the hands of those who earned it. In de Blasio’s view, people who earn too much are “the wrong hands.”

In the speech itself and in an interview with Jake Tapper on CNN’s “State of the Union,” he elaborated: the wealthy have too much money because they aren’t taxed enough.

There are whole books on the correct theory of taxation. De Blasio, like many politicians, seems operate on the theory most clearly enunciated in 1990 by Sen. Barbara Mikulski (D, Md.):

Let’s go and get it from those who’ve got it.

There are many theories of taxation, such as Haig-Simons, the Tiebout model, and the Ramsay Principle. But I’d bet that the Mikulski Principle explains actual taxation best. And as “progressives” are feeling their oats, we can expect more politicians and pundits to be asking, “Who’s got the money? Let’s go get it.”

This is a humanitarian crisis — a crisis of the heart and a crisis of the soul. Last month, 20,000 migrant children were illegally brought into the United States — a dramatic increase. These children are used as human pawns by vicious coyotes and ruthless gangs. One in three women are sexually assaulted on the dangerous trek up through Mexico. Women and children are the biggest victims, by far, of our broken system. This is the tragic reality of illegal immigration on our southern border. This is the cycle of human suffering that I am determined to end.

Here’s what his administration is doing to protect these women and children:

Their paper has an index where lower numbers indicate a culture more similar to that of the United States while a higher number indicates a culture more distant from that of the United States. As some extreme examples, Canada’s cultural distance score is 0.025 and Egypt’s is 0.24.

Using the cultural distance index, I calculated the cultural distance of the stock of immigrants in the United States in 2015 from native-born Americans. I then compared the cultural distance of the stock to the cultural distance of the flow of immigrants who arrived in 2012-2015. The immigration figures come from the Annual Social and Economic Supplement of the U.S. Census Bureau. If the stock of immigrants in 2015 was more culturally similar to native-born Americans than the flow, then the recent flow is more culturally distinct. If the stock of immigrants in 2015 was more culturally different from native-born Americans than the flow, then the recent flow is less culturally distinct.

Table 1 shows the results. The immigrant flow in 2012-2015 is more culturally different from native-born Americans than the stock of immigrants was in 2015. In other words, today’s newest immigrants are more different than those from the relatively recent past. Relative to the stock, the cultural distinctiveness of the flow in 2012-2015 was greater by about one-fourth of a standard deviation. In other words, the stock of American immigrants in 2015 was very culturally similar to people from Trinidad and Tobago (0.099) while the flow of new immigrants who arrived from 2012-2015 more similar to Romanians (0.11).

There are a few problems with my above calculations. First, those who choose to move here are likely more similar to Americans than those who do not. There is obviously some difference in cultural values inside of a country as the average person does not choose to emigrate to the United States. Second, American immigration laws likely select immigrants with similar cultural values through various means such as favoring the family members of Americans and those hired by American firms. It’s reasonable to assume that foreigners who marry Americans and who are hired by American firms are more culturally similar than the average person from those countries. Third, the cultural distance index only covers about two-thirds of the immigrant population in the United States. It is possible that countries not on the list could shift the score significantly in either direction.

Welcome to the Defense Download! This new round-up is intended to highlight what we at the Cato Institute are keeping tabs on in the world of defense politics every week. The three-to-five trending stories will vary depending on the news cycle, what policymakers are talking about, and will pull from all sides of the political spectrum. If you would like to recieve more frequent updates on what I’m reading, writing, and listening to—you can follow me on Twitter via @CDDorminey.

The Missile Defense Review dropped this morning. For those that have been patiently waiting to see this document for months, your time has finally arrived. Since this was just released hours ago, articles breaking down the details have yet to be posted. So stay tuned and check Twitter for commentary.

“Pentagon preps for budget delay as historic shutdown drags on,” Tony Bertuca. The President’s FY2020 budget request was supposed to be publically available and kick off the budget-making process on February 4th, 2019. With the government shutdown, and various topline numbers coming out of the White House, it looks like the budget request will be delayed.

“The Myth of Cyber Offense: The Case For Restraint,” Brandon Valeriano and Benjamin Jensen. What does a new era of Great Power Politics mean for American cyber policy? Mostly that it’s still being defined and actively shaped by the changing balance of power—and that the choices America makes now could have either stabilizing or destabilizing effects on the evolution of this domain.

First, Theresa May’s disastrous EU Withdrawal Agreement (negotiated and endorsed by the EU) suffered a crushing defeat in Parliament, going down by 432 votes to 202. This was a fundamental rejection of a deal with a host of problems. Under any normal circumstances, such a mammoth loss on a key policy would have ended a Prime Minister and a government.

Second, the leader of the opposition, Labour’s Jeremy Corbyn, called a subsequent vote of “no confidence” in the government. But with Brexiteers, including the Northern Irish DUP, swinging back behind the Prime Minister to avoid the possibility of a general election, the government survived (by 325 to 306).

What happens now? The default, set out by law, is that the U.K. leaves the EU on March 29th with or without a deal. It is well documented that there is a clear majority in Parliament who want to avoid leaving without a deal. But there is no clear majority for any of the options necessary to prevent a no deal exit.

I spent some time looking at the parliamentary arithmetic last night, from the perspective of Theresa May. She says that she a) wants to avoid no deal but b) wants to ensure she delivers Brexit. And there is no obvious means of achieving both of these goals.

Option 1: Operation Engage Conservatives

Her first option is to try to get more Conservatives on board to support a Withdrawal Agreement. But the difficulty of her being able to do so is set out by the graphic below. The Brexiteer Conservative rebels either want to completely throw out the Withdrawal Agreement for something new, remove a key provision (the backstop) or else simply leave without a deal. Given the EU has said publicly it will not renegotiate or remove the backstop, this seems a dead end unless May is willing to countenance no deal seriously.

The polling suggests that the Brexiteers were right about the politics up front – if the Prime Minister had pursued an “extensive Free Trade Agreement” Brexit and had not got bogged down in the complex arrangements she’d agreed, then a majority could just about have been eeked through on Conservative and DUP votes, with a smattering of Labour rebels (the no deal and no backstop crowds would have accepted it).

But we are where we are. Unless the EU is willing to reopen negotiations and offer a Canada+ deal for the whole of the UK (ending provisions to treat Northern Ireland differently) then tacking towards Brexiteers is endorsing the prospect of no deal, which May says she does not want.

It remains to be seen, of course, how many of these Brexiteers would actively support delivering Brexit through no deal if the EU rebuffed the opportunity to renegotiate outright. But through revealed preference (rejecting the Withdrawal Agreement), they have surely shown they are willing to countenance that risk.

One clear conclusion of this polling of Conservative rebels though is that there are only a tiny number of additional Conservative votes to be gained from a softer Brexit (single market *and* customs union membership – so-called Norway Plus). Given the commentariat all seem to think this week’s events must result in a softer Brexit, that means…

Option 2: Operation Engage The Opposition Parties

The second option is to give up on Conservative votes and try to reach out to opposition parties. Theresa May has offered Parliamentary talks to their leaders, and other groups of senior Parliamentarians. So far though, the leaders of the Labour party, the Lib Dems and the SNP have all said that their key demand is “taking no deal off the table.” Given no deal is the default Brexit, that essentially means “take guaranteeing Brexit off the table,” something the Prime Minister cannot do without her government likely falling.

The problem with dealing with the opposition parties is that they themselves are divided into two broad camps over what to do next.

Yesterday, 71 of 256 Labour MPs joined the campaign for a second referendum. Add in the Lib Dems, the SNP, the Green, a smattering of Independents who want this too and, say, 20 Conservatives, and there’s still only a combined circa 150 in the Chamber who are strongly for a fresh public vote. Even if the government went in this direction, and took the payroll vote with it, that would not command a majority in the chamber either. An overwhelming number of Conservative and Labour MPs in working class seats still by-and-large oppose a 2016 rerun. This could only happen if the Labour front-bench shift their position.

But the only other option that opposition parties might be interested in is a much softer Brexit: either a full, permanent customs union (Labour’s official position) or a Norway style option. Given 150 MPs would prefer a second referendum, it is unclear how many would opt for this if it was available. The only means of getting it through seems to be with Labour front-bench support, giving blessing to large numbers of Labour MPs to vote with the government. That would tear the Conservative party apart and probably guarantee a defeat in the next election, which would naturally appeal to Labour. But on the flipside, large numbers of Labour MPs in Leave constituencies would consider it highly risky as much of the media would describe as Brexit In Name Only, and the completely unreconciled Remainers would reject it for not fully ending Brexit.

Conclusion

Over the coming weeks, Parliament will likely host lots of indicative votes on all these options. The government has to bring forward a revised motion and try again. But so far the Prime Minister appears unwilling to change much of substance, and it’s not clear where she turns.

Crucial now will be the sequencing of votes by MPs for alternatives. If it gets to a stage where it’s the prospect of no deal against the last perceived line of defense against that happening, then Remainers and soft Brexiteers could unite. For now though, they are hopelessly divided too. Absent further constitutional vandalism endorsed by the Speaker of the House of Commons (a strong possibility), I still believe a no deal Brexit is highly possible, despite media claims to the contrary.

Irving Fisher’s classic treatise, The Purchasing Power of Money: Its Determination and Relation to Credit, Interest and Crises (1911), still offers valuable insights regarding monetary reform. This post examines some of Fisher’s insights and draws some lessons for Fed policy.

The Importance of Stable Money

Fisher recognized “the evils of monetary instability”—that is, “periodic changes in the level of prices, producing alternate crises and depressions of trade.” He argued that “only by knowledge, both of the principles and of the facts involved, can such fluctuations … be prevented or mitigated, and only by such knowledge can the losses which they entail be avoided or reduced” (Fisher 1912: ix). [1]

The main principles that guided Fisher’s work were embodied in the quantity theory of money and the theory of monetary disequilibrium. The former held that, ceteris paribus, the purchasing power of money (the reciprocal of the price level) depends on the quantity of money relative to real output (trade). If the economy is at full employment and the velocity of money is stable, then the purchasing power of money will be inversely related to the stock of money. If money moves in line with trade and velocity is stable, then monetary equilibrium will prevail and the value of money will also be stable (see Fisher 1912: 320).

When Fisher wrote The Purchasing Power of Money, the United States was still on the classical gold standard; there was no central bank. In his book, he defined money as “what is generally acceptable in exchange for goods” (p. 8). He recognized that “money never bears interest except in the sense of creating convenience in the process of exchange” and that “this convenience is the special service of money and offsets the apparent loss of interest involved in keeping it in one’s pocket instead of investing” (p. 9).

Fisher also importantly recognized that “money itself belongs to a general class of property rights” known as “currency” or “circulating media.” More specifically, “currency includes any type of property right which, whether generally acceptable or not, does actually, for its chief purpose and use, serve as a means of exchange” (p. 10). While Fisher classified bank notes as money and circulating media, he viewed checkable bank deposits as currency, not money in the strict sense (p. 11).

“Primary money” referred to commodity money (gold coin at the time), while “fiduciary money” (notably bank notes) referred to money whose value depended “on the confidence that the owner can exchange it for other goods” (ibid.). “The chief quality of fiduciary money,” wrote Fisher, “is its redeemability in primary money, or else its imposed character of legal tender” (p. 12).

Fisher refined the quantity theory of money to take account of monetary disequilibrium and used statistical methods to test the theory against historical data. Like his contemporaries, he understood that the fundamental cause of business fluctuations was erratic money.

“That buzzing noise over a construction site could be an OSHA drone searching for safety violations,” notes Littler Mendelson lawyer Tammy McCutchen in a piece for the Federalist Society. Quoting a U.S. Department of Labor memorandum from May of last year obtained by Bloomberg Law, McCutchen writes that “your friendly neighborhood OSHA inspector is now authorized by the Labor Department ‘to use camera-carrying drones as part of their inspections of outdoor workplaces.’”

What about the Fourth Amendment, you may ask? Well, court review is unlikely because current procedures call for the agency to obtain employer consent before sending the spycams aloft. Which makes everything okay, right?

Not really. As McCutchen writes, employers who refuse such consent “risk the ire of the DOL, with serious consequences. Nothing is more likely to put a target on an employer’s back for multiple and frequent future investigations than sending a DOL investigator away from your doors. Refusing consent will label you at the DOL as a bad faith employer that deserves closer scrutiny. This I know through experience practicing before DOL and as a former Administrator of DOL’s Wage & Hour Division.”

So consent will often, maybe nearly always, be given despite the dangers one might imagine. Some of those dangers: “The drones could record trade secrets or employees doing things they shouldn’t. But the memo contains not a single word on protecting the privacy of employers or employees caught on video. How long will OSHA retain the video? Who will have access to the video? Will the videos be obtainable by competitors or unions through a FOIA request?” Or, for that matter, by other law enforcement agencies seeking to build a completely unrelated legal case against the employer, employees, or perhaps even the owners or users of nearby property?

All of which points up one of the problems with trying to turn the abstractions of civil liberties into something real: before a court can act on behalf of your rights, you need to be able to say no to the government’s demand in the first place, or else there will be no dispute for the court to review. And across much of our regulatory and administrative state, that power to say no in the first place has been tending to ebb away. [adapted from Overlawyered]